One of the most pivotal weeks of the year turned out to be records galore for Wall Street – the S&P smashing past the 6,000 point level in a historic first. The Dow Jones Industrial Average notched its 41st and 42nd record close of the year while also taking out the 44,000 point level for the first time ever.
The event of the week, and possibly of the year, was the culmination of the U.S. presidential election on Tuesday. By the early hours of Wednesday, former President Donald Trump, a Republican, had secured the 270 electoral votes needed to win against Democratic opponent Vice President Kamala Harris. The GOP also won the Senate, while the House remains undecided, though a red sweep seems most likely. The so-called “Trump trade” gripped markets, with the S&P and the Dow on Wednesday eventually notching their best post-election intraday climbs ever.
On Thursday, the spotlight shifted to the Federal Reserve interest rate decision of the year. The central bank delivered a 25 basis point rate cut as widely expected, following which Chair Jerome Powell said both the labor market and inflation were normalizing. For the week, the S&P soared 4.7%, while the Nasdaq Composite jumped 5.7%. The Dow climbed 4.6%.
Future Wealth’s View
The choice the people of America had for the next President was between a felon and an attorney. We chose the felon to lead the country for the next four years. History books will be written about the choice that we have made and the impact it will have on world order, America’s credibility and the decay of morality in politics.
But, as investors, there are few ways to take advantage of the Trump Presidency. His proposed tax cuts, if implemented, would lower tax corporate tax rates to 15% from 21%. Such a tax cut, would help the earnings of most companies but especially favor small cap companies. The next big item on his agenda is deregulation. Loosening regulations would propagate a windfall of mergers and acquisitions which in turn would favor Wall Street banks. On the other hand, environmental causes could suffer as will global investments due to stiff tariffs.
We, at Future Wealth LLC, believe that with the interest rate cuts, a solid economy and potentially favorable tax policies, the bull market could continue to extend itself with the S&P 500 moving comfortably higher from the 6000 levels by the end of the year.
It’s time to pinch ourselves with returns we have had this year from the stock market.